Anna Jacobson Schwartz

Anna Jacobson Schwartz (1915–2012) was an American economist whose meticulous empirical work and unwavering dedication to data redefined our understanding of monetary economics and economic history. Born into a world that, frankly, often preferred grand theories to granular facts, Schwartz stubbornly insisted on the latter, earning her a place among the most influential — and often, most inconvenient — economic thinkers of the 20th century. Her most renowned contribution, a collaboration with Milton Friedman, was a tome that effectively told an entire generation of economists, "You were wrong about pretty much everything."

Early Life and Education: A Glimmer of Sanity

Anna Jacobson entered this chaotic world on November 11, 1915, in New York City, a place known for its relentless pace, much like Schwartz herself. She embarked on her academic journey at Barnard College, graduating in 1935, which, for those keeping score, was right in the thick of the Great Depression – a period she would later dissect with surgical precision. One might imagine the palpable economic anxiety of the era serving as a rather pointed, real-world case study for her burgeoning interest in how economies spectacularly unravel. It seems even early on, she possessed a knack for observing human folly in real-time, preparing her for a career of pointing it out.

She then pursued graduate studies at Columbia University, because apparently, one degree wasn't enough to satisfy her insatiable curiosity for the dismal science. She earned her M.A. in 1937 and, after a brief, entirely understandable hiatus to raise a family – because even economic titans occasionally acknowledge biological imperatives – she returned to complete her Ph.D. in 1964. Her doctoral dissertation, a deep dive into British monetary policy during the Victorian era, was a precursor to the detailed, historical analysis that would become her hallmark. It showcased an early, undeniable talent for sifting through vast archives and extracting truths that others had conveniently overlooked or simply lacked the patience to find. This early work already hinted at her preference for hard evidence over theoretical gymnastics, a character trait that would define her career.

A Career Forged in Data: The National Bureau of Economic Research

Schwartz's professional life was inextricably linked with the National Bureau of Economic Research (NBER), an institution that, thankfully, understood the value of empirical rigor. She joined the NBER in 1941, beginning a tenure that would span more than seven decades, effectively making her a permanent fixture in the landscape of economic research. While others chased fleeting theoretical fads, Schwartz remained steadfast, meticulously collecting and analyzing data, a task often considered tedious by those less committed to the pursuit of inconvenient truths. Her long association with the NBER wasn't just a job; it was a testament to her unwavering commitment to the empirical method, a relentless pursuit of what actually happened rather than what should have happened according to some elegant, yet ultimately flawed, model.

At the NBER, she became a research associate, and later a distinguished fellow, dedicating herself to the study of economic history and monetary phenomena. Her work was characterized by an almost pathological attention to detail, a trait essential when you're attempting to correct decades of received wisdom. She understood that grand narratives, while comforting, often crumble under the weight of actual evidence. Her initial projects involved analyzing capital formation and national income, laying the groundwork for her later, more revolutionary contributions. It was here that she honed the skills of data compilation and interpretation, becoming an unparalleled expert in what actually happened, as opposed to what economists thought happened. Her capacity to dig through historical records and extract meaningful economic indicators was unmatched, making her an indispensable asset to serious economic inquiry.

The Friedman–Schwartz Collaboration: A Monetary History

It is impossible, truly impossible, to discuss Anna Schwartz without immediately conjuring images of her monumental collaboration with Nobel laureate Milton Friedman. Their partnership, which began in 1948 and lasted for decades, produced what is arguably one of the most significant and disruptive economic texts of the 20th century: A Monetary History of the United States, 1867–1960, published in 1963. This wasn't merely a book; it was an intellectual bombshell, meticulously constructed brick by empirical brick, designed to shatter prevailing orthodoxies. Their working relationship, often described as a perfect intellectual marriage of theory and data, allowed them to challenge assumptions that had long been considered sacrosanct in macroeconomics.

The central thesis of A Monetary History was, in essence, that "money matters." This might sound like a blindingly obvious statement now, but at the time, particularly in the wake of dominant Keynesian economics, it was considered heresy. The book presented an exhaustive, almost mind-numbing, account of the role of the money supply in American economic fluctuations over nearly a century. They systematically demonstrated that changes in the money supply were the primary drivers of economic booms and busts, rather than merely passive reflections of economic activity. Their detailed statistical analysis, covering everything from banking panics to periods of rapid economic growth, provided an irrefutable case.

Their most famous, and perhaps most infuriating to the establishment, conclusion was regarding the Great Depression. Contrary to the prevailing view that the Depression was a failure of capitalism requiring massive government intervention, Friedman and Schwartz argued that it was, in fact, a catastrophic failure of monetary policy by the Federal Reserve. The Fed, they meticulously documented, had allowed the money supply to contract by a staggering one-third between 1929 and 1933, turning a severe recession into an unprecedented economic catastrophe. This wasn't an accident; it was, in their view, an institutional blunder of epic proportions, exacerbated by a lack of understanding of the monetary mechanisms at play. Schwartz's role in this was critical; she was the indefatigable architect of the data, the one who ensured every number, every historical anecdote, every minute detail was correct, leaving no room for theoretical hand-waving or convenient historical revisionism. Her rigorous empirical foundation gave the arguments an undeniable weight.

Key Economic Insights and Enduring Influence

Beyond the monumental Monetary History, Schwartz's work offered several other critical insights that continue to resonate, much to the chagrin of those who prefer simpler narratives or wish to ignore the lessons of history.

The Role of Monetary Policy

Schwartz was a staunch advocate for the paramount importance of monetary policy in stabilizing economies. She argued consistently that central banks, like the Federal Reserve, held immense power over economic outcomes through their control of the money supply and interest rates. Her research provided compelling evidence that discretionary, often politically motivated, monetary interventions frequently did more harm than good. Instead, she favored clear, predictable rules for monetary growth, a concept that would later underpin much of monetarism. She saw the Fed not as a benevolent guiding hand, but as a powerful, fallible institution capable of profound blunders if not constrained by rigorous principles. Her warnings about the dangers of excessive discretion continue to be relevant in contemporary debates about central bank independence.

Challenging Conventional Wisdom on Inflation

Schwartz also contributed significantly to our understanding of inflation. Her work, particularly in collaboration with Friedman, highlighted that "inflation is always and everywhere a monetary phenomenon." While this phrase is often attributed solely to Friedman, Schwartz's empirical investigations provided the bedrock for this assertion. She demonstrated, through historical analysis, that sustained periods of rising prices were invariably linked to excessive growth in the money supply, effectively dismissing more complex, multi-causal explanations as often distracting noise. This was, naturally, not a popular stance among those who preferred to blame everything from greedy corporations to union demands, but the data, as Schwartz always insisted, spoke for itself. Her work clarified the long-term relationship between money supply and price levels, a fundamental principle of quantity theory of money.

International Monetary Systems

Her expertise wasn't limited to domestic affairs. Schwartz also delved into the intricacies of international monetary systems, including the historical performance of the gold standard. She authored significant works on the subject, often with other collaborators, examining how global financial flows and exchange rate regimes impacted national economies. Her historical perspective was invaluable in dissecting the complex interplay between domestic policies and international financial architecture, proving that even seemingly antiquated systems held lessons for modern policymakers, if only they bothered to look. Her work demonstrated that understanding the mechanics of exchange rates and global capital movements was crucial for any nation's economic stability, a lesson that periodically seems to require relearning.

Legacy and Recognition: A Prophet in Her Own Time

Anna Schwartz passed away in 2012 at the venerable age of 96, having witnessed her "inconvenient truths" gradually become mainstream economic orthodoxy. Her work transformed macroeconomics and central banking, forcing a re-evaluation of the Federal Reserve's role and the mechanisms through which monetary policy impacts the real economy. For decades, her insights were considered controversial, challenging the prevailing Keynesian consensus. Yet, by the turn of the 21st century, many of her once-radical ideas—particularly the importance of stable money growth and the Fed's culpability in the Great Depression—were widely accepted, even by the Fed itself, a testament to the undeniable power of empirical evidence.

She received numerous accolades throughout her long career, though perhaps not the Nobel Prize that many felt she deserved alongside Friedman. She served as president of the Western Economic Association International in 1988 and was a distinguished fellow of the American Economic Association. In 2007, she was awarded the Adam Smith Award by the Association of Private Enterprise Education, a fitting tribute to an economist who championed free markets and empirical truth over theoretical dogma. Her legacy is one of intellectual honesty, relentless empirical investigation, and an unwavering commitment to letting the data speak, even when it spoke uncomfortable truths. She left behind a body of work that continues to remind economists that history, when meticulously examined, is often the best guide, even if it does make them look a bit silly sometimes. Her influence lives on in the ongoing discussions about central bank accountability and the foundations of sound economic policy.